South Africa Says State Companies Must Fund Expansion Projects

Oct. 23 (Bloomberg) -- South Africa’s National Treasury cut
its spending budget for new infrastructure projects and said
state-owned companies will have to finance their own expansion
plans instead of relying on the government.

State companies must take the lead in implementing an
estimated 3.6 trillion rand ($367 billion) of projects in new
energy, transport, water, housing and telecommunications by
2023, the Treasury said in its mid-term budget report released
in Cape Town today. Power utility Eskom Holdings SOC Ltd. and
national oil company PetroSA are among those to warn that they
may face funding gaps.

“State corporations are expected to borrow on the strength
of their balance sheets, rather than being funded” by the
state, the Treasury said. “Where capitalization of core public
assets may be required, other measures such as upfront disposal
of non-core assets will be considered.”

The mid-term budget allocated 84.3 billion rand for
communication, energy and transportation projects in the year
through March 2014, down from 88.6 billion rand in the February
budget. The allocation was reduced to 94.1 billion rand from 97
billion rand in fiscal 2015, and to 102.7 billion rand from
105.6 billion rand the year after that.

Additional funds will be made available to the Passenger
Rail Agency of South Africa to buy 300 new trains over the next
decade, the Treasury said, without providing details.